Optus urges Telstra to get real on advertising claims

Optus is trying to force Telstra to drop its “network without equal" campaign promoting superfast “4G" mobile services, alleging its advertisements are in accurate.

The Weekend Financial Review has learned that in private correspondence, Optus has asked
Telstra
to change a number of aspects of its 4G advertising campaign, which the No. 2 carrier believes are unfair.

Telstra has withdrawn claims that its mobile coverage is twice as fast as any of its rivals but has not backed down from statements that it has the “fastest", “best" and “highest ranking" network in the country.

The SingTel-owned telco is believed to have previously raised concerns with the Australian Competition and Consumer Commission about misleading claims on network speeds and will not rule out taking legal action.

“As Optus uses the same type of 4G technology, we have raised with [Telstra] a number of their claims regarding speed and performance which appear to be inconsistent with recent network testing reported by various media outlets," an Optus spokesman said.

“Optus believes it’s important that all customers are provided clear and accurate information on the experience and choice they will receive from their mobile network."

Optus cited recent testing conducted by The Sydney Morning Herald using an iPhone 5, which found the Optus network offered faster speeds than Telstra at 11 of 13 locations in the Sydney metropolitan area. Telstra’s 4G network was only available at six of these locations, compared with all 13 for Optus.

Telstra and Optus have been embroiled in a number of legal disputes over the years. However, the new tensions over network quality come at an inflexion point for Australia’s mobile industry, which analysts believe has matured after revenues declined across the sector for the first time on record last year.

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Telstra has made network superiority the centrepiece of its strategy in mobiles, which has arguably been the key driver of its recent return to profit growth.

At a briefing held for institutional investors and analysts this past week, Telstra said preserving its mobile network advantage over rival carriers was one of its major strategic priorities for the year ahead.

Telstra’s executive director, mobile products Warwick Bray said “[20]12 was the year of the network in the sense that we were much more clear about our network superiority and I hope you’re currently enjoying our ‘network without equal’ campaigns".

“You can expect a lot more marketing of the benefits of our network."

Mobiles are now Telstra’s biggest operating segment, accounting for nearly a third of its total revenues, or $8.7 billion in 2011-12. In two years, Telstra has captured 90 per cent of market growth, according to Citi, adding 3.2 million subscribers compared with 824,000 additions at Optus and a loss of 590,000 customers at Vodafone. Telstra has also used its network to charge consumers higher prices. Alice Bennett, a Commonwealth Bank analyst, estimates Telstra charges a 15 per cent premium on voice services, and 20 per cent on data, compared with its rivals. It launched the first 4G network in Australia in September last year, offering speeds of up to 40 megabits per second to about 40 per cent of the population. Its 4G services now cover a 5 km radius in all capital cities, and are available in many regional centres.

Optus activated 4G services for consumers in September. Its 4G network now covers a 10 kilometre radius in east coast capitals and Perth. It is available in the greater Newcastle area and the Gold Coast.

In August, just weeks after Optus launched 4G, Telstra announced a $400 million investment to extend its superfast footprint to cover two thirds of the population by June next year. Both Telstra and Optus operate 4G services on the 1800 megahertz spectrum frequency. However, next year Optus will launch a dual band 4G network, incorporating China’s home-grown variant of the superfast technology, known as TD-LTE.